Fast Food Stocks Deliver Mixed Bag

NEW YORK ( TheStreet) -- A roster of restaurant stocks, including Tim Hortons ( THI), Brinker International ( EAT) and Wendy's Arby's Group ( WEN) posted quarterly results Thursday, dishing up a mixed plate of results.

Coffee-and-donut chain Tim Hortons posted better-than-expected earnings, thanks to strong same-store sales growth in its Canadian stores. Chili's operator Brinker International ( EAT) missed top- and bottom-line expectations but forecast 2011 earnings in line with analysts' consensus call. Wendy's Arby's missed expectations and lowered its 2010 outlook.
Tim Hortons

Tim Hortons attributed its 21% jump in second-quarter earnings to stronger same-store sales, or sales at stores open at least one year, in its Canadian locations. System-wide comps grew 9.2%. The figure included a 6.4% jump in Canada, compared with an increase of 1.7% in the year-earlier quarter. Same-store sales at its U.S. locations grew 3.1%, down from a 3.3% rise in the second quarter of 2009.

Fast food behemoth McDonald's ( MCD), which competes with Tim Hortons for market share in the coffee-drinks space and with Wendy's Arby's in the fast food sector, said earlier this week its comps surged 7% in July, fueled in large part by its beverage business. It was the burger-and-fries chain's biggest monthly increase by that measure since April of 2009.

The Golden Arches said it grew overall global comps by 4.8% in its recent quarter, helped by its dollar menu and an expanded list of coffee drinks, but the figure came up short of expectations and McDonald's stock fell more than 2%, closing below $70 per share the day it released the quarterly results. McDonald's posted double-digit profit gains for the period.

McDonald's shares have rebounded since then, hitting an all-time high of $73.33 in trading Monday. The stock traded at $71.86 Thursday afternoon.

Oakville, Ontario-based Tim Hortons, founded by famed Toronto Maple Leafs hockey player Tim Horton, earned $94.1 million, or 54 cents per share, in the recent quarter, up from profits of $77.8 million, or 43 cents per share, in the year-earlier period. Revenue grew 5.7% to $639.9 million.

Tim Hortons also said it sold its 50% interest in Maidstone Bakeries to Swiss partner Aryzta AG for $457.8 million. The company said funds from the sale would likely go toward returning value to shareholders.
Tim Horton's Stock Rating Report
(THI) Rating and Financial Analysis

Shares of Tim Hortons jumped 7.2% in early-afternoon trading on more than double their average volume.

Meanwhile, Wendy's Arby's said system-wide same-store sales at Wendy's restaurants decreased 1.7% in its fiscal second quarter, ended July 4, while comps at Arby's fell 7.4%. The Atlanta-based company expects Wendy's comps will be positive in the current quarter, while same-store sales at Arby's will remain negative for the quarter, with sequential improvement quarter-over-quarter.

Wendy's Arby's lowered its 2010 profit outlook to a decline of 3% to 5% year-over-year, a reversal from its prior outlook for earnings growth in the low to mid single digits. Comps are expected to be flat year-over-year at Wendy's North America restaurants and negative at Arby's North America.

Earlier this week, Wendy's Arby's said it plans to open 180 restaurants in Russia over the next 10 years as the fast food chain moves to expand its global footprint. The company also recently announced deals to open 100 Arby's restaurants in Turkey, 24 Wendy's restaurants in Trinidad and Tobago and eight other Eastern Caribbean markets -- all in the next decade.
Wendy's Arby's Group's Stock Rating Report
(WEN) Rating and Financial Analysis

Quarterly earnings fell 4.2% to $10.7 million, or 3 cents per share, down from $14.9 million, or 3 cents per share, in the year-earlier period. Revenue fell 3.9% to $877 million. The figures missed expectations for earnings of $21.7 million, or 5 cents per share, on revenue of $886.7 million.

Wendy's shares edged 0.2% lower.

Brinker shares jumped 5.1% on higher-than-normal volume Thursday despite the Chili's restaurants operator's weaker-than-expected earnings.

Brinker missed top- and bottom-line expectations for its fiscal fourth quarter but forecast 2011 earnings in line with analysts' consensus call. Brinker forecast that fiscal 2011 comps would be flat to a decrease of 2%, with the first half of the year being more challenging as it laps heavy promotions it offered customers in the first half of fiscal 2010. The company said full-year revenue should decrease between 2% and 4%, from 2010 revenue of $2.86 billion, to a range between $2.75 billion and $2.8 billion. Analysts expect the company to book 2011 revenue of $2.81 billion.

The Dallas-based company, which also operates Maggiano's Little Italy restaurants, said comps decreased 3.4% year-over-year, including a 4.1% decrease at Chili's and a 1.3% increase at Maggiano's.
Chili's

On June 30, Brinker completed the sale of On The Border Mexican Grill & Cantina restaurants to OTB Acquisition, an affiliate of Golden Gate Capital, for gross proceeds of $180 million. Results from On The Border were reported as discontinued operations.

Brinker posted net fiscal-fourth-quarter earnings of $63.6 million, or 62 cents per share, up from $42.2 million, or 41 cents per share, in the year-earlier period.

Adjusted earnings, which exclude On The Border results, were $45.2 million, or 44 cents per share, missing analysts' consensus call for earnings of $47.5 million, or 46 cents per share. Analysts typically exclude one-time items and discontinued operations when forecasting earnings estimates.
Brinker International Group's Stock Rating Report
(EAT) Rating and Financial Analysis

O'Charley's ( CHUX), which operates its namesake and Ninety Nine fast-casual restaurants, posted disappointing quarterly results, leading shares 3.6% lower.

The Nashville, Tenn.-based company said same-store sales at O'Charley's company-operated restaurants tumbled 7.9% on a 5.7% drop in guest counts and a 2.4% decline in average check. Comps at Ninety Nine and Stoney River Legendary Steaks restaurants fell as an uptick in guest counts offset declining average checks.

Ninety Nine enjoyed its first quarter of positive guest count growth in more than four years, the company said.

O'Charley's did not offer specific guidance for 2010, attributed to limited visibility amid continued challenges in the overall economy, but did forecast current-quarter revenue between $186 million and $192 million, and a loss from operations between $1 million and $4 million. Analysts' consensus call is for a loss of $3.1 million on revenue of $186.4 million.
O'Charley's Stock Rating Report
(CHUX) Rating and Financial Analysis

Red Robin Gourmet Burgers ( RRGB) is on deck to report after the closing bell. Analysts expect the Greenwood Village, Colo.-based chain to post earnings of $5.8 million, or 36 cents per share, on revenue of $207.6 million.
Red Robin Gourmet Burger's Stock Rating Report
(RRGB) Rating and Financial Analysis

Red Robin shares traded down 2% ahead of the report.

-- Reported by Miriam Marcus Reimer from New York.

RELATED STORIES:









>>See our new stock quote page.

Follow Miriam Marcus Reimer on Twitter and become a fan of TheStreet on Facebook.

Get more stock ideas and investing advice on our sister site, Stockpickr.com.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

More from Emerging Markets

Video: Here's How Global Stocks Can Boost Your Portfolio

Video: Here's How Global Stocks Can Boost Your Portfolio

Wall Street Looks To Extends Gains After Goldman Earnings Beat, China Data

Wall Street Looks To Extends Gains After Goldman Earnings Beat, China Data

China's President Xi Jinping Tells Boao Forum He Supports Opening Markets

China's President Xi Jinping Tells Boao Forum He Supports Opening Markets

U.S. Stock Futures Steady; Asia Stocks Mostly Lower

U.S. Stock Futures Steady; Asia Stocks Mostly Lower

Jim Cramer: There Are Plenty of Shorts in Constellation Brands

Jim Cramer: There Are Plenty of Shorts in Constellation Brands